37 page opinion, 25 page dissent on whether a non-us company can bring a Lanham Act claim based on the mere advertisement of its trademarks in the U.S. Important case in the era of the Internet, analysis to follow.

“The House of Lords handed down a decision in the criminal counterfeiting case: Regina -v- Johnstone. The judgment appears to have been written without sight of the judgment of the Court of Appeal in Arsenal and also deals with the issue of whether “trade mark use” is necessary for trade mark infringement.

In yesterday’s Court of Appeal judgment in Arsenal, Aldous LJ stated:

It is important to note that the ECJ is not concerned with whether the use complained about is trade mark use. The consideration is whether the third party’s use affects or is likely to affect the functions of the trade mark.

However the Law Lords who gave judgments in today’s decision appear to have interpreted the decision of the ECJ in the Arsenal case as requiring “trade mark use”.

The background to the case is that Mr Johnstone was charged with having committed criminal offences under section 92 Trade Marks Act 1994 by including on counterfeit CD labels the name of the group or artist whose performance was recorded on the CD in question eg “Bon Jovi”, “U2″, “Rolling Stones”, etc. Mr Johnstone argued that his use merely described the contents of the products bearing the words i.e. music by “Bob Jovi”, etc and the House of Lords was asked to consider whether “trade mark use” was necessary for civil infringement under s.10(1) Trade Marks Act 1994 (identical goods/identical marks).

Both Law Lords held that the ECJ in the Arsenal decision had decided that trade mark use was necessary for infringement under section 10(1) to (3) and that section 92 was therefore to be interpreted as applying only when the offending sign is used as an indication of trade origin.

However the House of Lords stated that in the Arsenal case trade mark use had been found by the ECJ. Use of the Arsenal logo was not intended for purely descriptive purposes. The use was such as to create the impression ‘that there is a material link in the course of trade between the goods concerned and the trade mark proprietor': see para 56. Whether it was open to the European Court to reach this factual conclusion has proved controversial: see [2002] All E R (D) 180. The rights and wrongs of this particular controversy are not material to the outcome of the present case.

The factual situations in the two cases are different but the two Courts appear to have reached opposite conclusions as to whether the ECJ held that “trade mark use” is necessary for infringement. This can only increase the likelihood of Mr Reed being given leave to appeal to the House of Lords.”

“Judgment was handed down yesterday by the Court of Appeal in Arsenal Football Club PLC -v- Matthew Reed

In summary they overturned Mr Justice Laddie on his finding that:

1. the ECJ decision was not binding on him in all respects; and

2. that on the facts Reed’s use of the trade mark did not designate origin (ie the “trade mark use” point”).

They also cast doubt on his reasoning on passing off decision even though this was not appealed by pointing out he had referred to the wrong case.

The judgment is very brand owner friendly and seems to make the question of whether or not something is “use as a trade mark” is irrelevant to the question of TM infringement.

Is the ruling of the ECJ Binding ?

AldousLJ explained that the ECJ decision was not based on whether the use complained of was “trade mark use”. Instead the relevant consideration was whether the use complained of was likely to jeopardise the guarantee of origin which constitutes the essential function of the mark. That did not depend on whether the use complained of was trade mark use.

The ECJ gave two examples of how Reed’s use affected the functions of the trade mark:

1. Consumers who obtain or are given the product away from the environs of Mr Reed’s stall may believe there is a link between the goods and Arsenal;

The Court of Appeal said this was not inconsistant with the Judges findings of fact. He was concerned with the effects of the signs upon Mr Reed’s customers, not upon consumers who might not know anything about Mr Reed.

2. The goods are supplied outside the control of AFC. This undermines the guarante that all goods designated by the trade mark have been manufactured or supplied under the control of a single entity.

The Court of Appeal rejected the claim by Reed that this also contained findings of fact contrary to those of the Judge. The Judge’s findings related to whether use by Mr Reed was “trade mark use” – the ECJ was looking at the function of the trade mark. Clearly unchecked use of the mark by a 3rd party (which is not descriptive use) is likely to damage the function of the trade mark because the registration will no longer be able to guarantee origin.

The Court of Appeal held that the Judge had misinterpreted the ECJ’s decision – finding that it decided that Arsenal should win because Mr Reed’s usewas such as would be perceived by some customers as a designation of origin. This was not the basis of the ECJ decision. The ECJ had held that the important consideration is whether the right given by the resgistration is likely to be affected by a third party’s use.

“Trade Mark Use”

Although not necessary because of the finding above – the Court of Appeal found on the evidence that the use by Mr Reed of “Arsenal” did designate origin of the goods to a substantial number of consumers.

Passing Off

Even though it was not the subject of an appeal by Arsenal the Court of Appeal cast doubt on Laddie’s reasoning on passing off.

Unsurprisingly the Court of Appeal refused Reed leave to appeal to the House of Lords but he has indicated he will be applying to them to seek leave.”

This really is a Seventh Circuit case as to whether there can be a binding oral assignment of copyright in fake novelty teeth. Plaintiff made Austin Powers’ teeth. The decision offers numerous insights into a hitherto misunderstood product.

Ben Edelman has released a preliminary report on Gator, which monitors users’ visits and provides targeted pop-up advertising. Ben has devised a method for discerning which third-parties may be using Gator to target a particular website. Ben describes his report as follows:

“I today released “Documentation of Gator Advertisements and Targeting,” a report that describes my methodology and findings, including more than seven thousand speciic web sites targeted by Gator. My report also offers users a web form for testing whether Gator targets specified sites, and if it does, viewing the speciic ads Gator shows.”

I have used Ben’s services on behalf of a client and his test appears to do what he says it does.

Producers of Prosciutto di Parma ham and Grana Padano cheese prevailed in the European Court of Justice as the ECJ upheld laws requiring purveyours of products bearing those appellations of origin to perform certain processes (in this case slicing the ham and grating the cheese) in the region of origin. Parties to the cases (including Wal-Mart’s ASDA supermarket) had been importing the products from Italy and processing them abroad. The Court, in its unofficial press release, noted that:

. . . the grating of cheese and slicing of ham and their packaging constitute important operations which may damage the quality and authenticity and consequently the reputation of the PDO [protected designation of origin] if those requirements are not complied with. The specifications for Grana Padano cheese and Parma ham define checks and detailed strict operations in order to preserve the reputation of those two products.

The PDOs of those products would not be protected in the same way by an obligation imposed on operators outside the region of production to inform consumers by appropriate labelling that grating, slicing and packaging have taken place outside that region. There are therefore no alternative, less restrictive measures to attain the objective pursued.

However, the Court finds that the protection conferred by a PDO does not normally extend to operations such as grating, slicing and packaging the product. The Court states that those operations are prohibited to third parties outside the region of production only if that is expressly laid down in the specification. The principle of legal certainty requires that adequate publicity be given to those prohibitions – for example being mentioned – to bring them to the attention of third parties. In the absence of such publicity, those prohibitions cannot be relied on before a national court.

The link to the decision will be available shortly on the www.curia.eu.int site.